The Dominion. TUESDAY, SEPTEMBER 7, 1909. GERMANY'S FINANCES.

Dominion, Volume 2, Issue 605, 7 September 1909, Page 4

The Dominion. TUESDAY, SEPTEMBER 7, 1909. GERMANY'S FINANCES.

Duiung .the recent discussions of Germany's naval policy, very little thought, has been'given to the financial position of Germany. Nearly everybody seems to have taken for granted the -ability of: Germany to do anything it chooscs in the way of building .navies: the average Britisher has been too; excited'to reflect that in Germany no less than in Britain the financial aspect of naval policy is allimportant. It would not be very incorrect to say that the average New. Zealander, when he has thought about the matter at all, has thought of Germany as being free from, any need to . worry' over the pounds and thfa pence. Yet the money problom is' the most important of all tho problems that lenter into internatidnal relations.;. Special •■■■• interest attaches,, therefore, to' an article in : the. latest number of the Americin Review of Ecviews. .Frederick Austin Ogo gives a comprehensive account of the .financial position of , Germany, in which he traces the astonishing growth of Germany's activities siiice the war with France.: At : the present timo. the Imperial- finances are very seriously, embarrassed, but this by no means signifies much more -than that the system, of. Imperial - finance, is very unbusinesslike; In, 18Y1 there' was, no German Navy worthy i of the name, ; and,'not onc v squaro mile, of foireign possessions; to-day the German "colonial empire comprises an area of over a million square miles,'the Army, is the greatest in the world, the Navy is challenging Britain's,"supremacy, and in every department of national life the progress has been so'enormous that it,would have been creditable had .it represented a century's labours. '- It was in 1885, when Germany first set out on a policy of colonial, 1 and naval aggranclisemont, that the figures of the Imperial expen diturp began to swell. The expenditure amounted to £37,000,000 in. 1888; in the Budget -for, the, current year it wasestimated at/ £143,270,000. During,.the. twenty years from 1883 to 1 1008 the population of the Empire increased by 30 per cent.; the Imperial Budget.increased.by.23o'per cent.. ;Tho 'Navy, which, in .138-3 cpst; £2,600,000, .is now . costing over dC20,000,000 - a, year, and the cost'of the Army yas £-12,715,000 in loos'. It long ago became l apparent that the old system of ■ Imperial • iinanco, was \ inadequate to cope ' with, these soaring expenditures. ... In 1871 the - idea was that the Empire; should concern itself with as little as possible outside defence, and the Imperial revenues were derived, from the import dutios,'. the post, and certain exciso duties. As early as' 1876: it was found necessary' to borrow, and, as time went on*' to borrow .more'heavily.;, tlie end of - the 'eighties the Government 'fell-into tho habit of negotiating:- large loans "without adhering to any, established rule, and of 'using•,the: easily , ae,'quiied [loan] funds, for expenditures ,which should have been provided (for,-out of,-the regular, revenues, a : habit:which is causing much; of ; tho . presont !tr6itbles.V Quite like New, Zealand, \it will. be .seen,' > In. 1879; Bismarck origi-nated-the tariff which , made Germany a, Protectionist country, and on the fruits of which tho Imperial Treasury has since principally depended. -The Customs duties rose from £9,500,000 in' 1832' to £28,000,000 in;. 190 G.; . The excises, ■ the great "consumption taxes," amounted in 1006 tc £19,000,000, and the other .main taxes, yielded about . £14,000,000. But , the needs of the Treasury have been constantly in excess of its resources, with tho 'result that .the Imperial - debt has been multiplied ! by, ten;. in , the last '. 23 years'.. The. increase in tho aggregate of Imperial, State, and municipal indebtedness lias been over . £650,000,000 'since 1882; -About half of the indebtedness of the Empire , is represented by reproductive works, but the; other half • is utterly unproductive, and, ; says Mr. Ogo, "tho disquieting feature of tho situation is that tho unproductive . expenditures of the,. Kaiser's Government aro 1 .tending more and more to be covered,' not by current receipts, but by loans." Behind this ■financial muddlement Germany has: gone rapidly forward as an industrial nation. Side by side there is to be seen, "an enterprising, patriotic; welMo-do. people, 'at the flood-tide, of national prosperity," and "an antiquated. Imperial fiscal system, with steadily-growing expenditures, deficits, and debts." Yafious attempts have been made to place the Imperial finances on a sounder footing, culminating in the Budget which has for some months convulsed German politics, and which has led to the • resignation of Prince von Bulow and tho transformation of' the . wholo face of German parties. v'v ■■ In Mr. Ogg's opinion tho Empire cannot hope for much from an extended policy ',of direct,'taxation, sineo the possibilities' of direct taxes are"already pretty fully exploited by the State and local Governments.' The future, of Imperial taxation appears to him to lie along the lino of indirect imposts, particularly in the way of increased excises. Since the capacity of Germany to outbuild Britain in the race for naval supremacy depends very largely on , the. capacity of the German taxpayer to assume heavier burdens, the economic position of the Empire is all-important.' Since 1871 the population has increased by 50 per cent., and there has been such a steady decline in tho ..proportion of the agriculturists that to-day-they are Outnumbered. by tho industrial and commercial classes- by nearly three to one. Since 1871 the production of coal within the Erapiro has increased fivefold, of pig iron threefold, and of general manufactures .fourfold. Leading; Germans declare that Germany is really more wealthy ! than Britain. Herb: for example, says .that Britain's national . wealth amounts to £15,000,000,000, and i Germany's , to £17,500,000,000; Professor Delbrilck. shares this view.. There, is no doubtwhatever, in any case, that Germany has made astounding progress since 1871 ;■ whether, her progress, is stable,, is another question. Tho Gcrmitn taxpayer, also, is certainly less heavily, burdened than the Englishman, the Frenchman, or tho American. A roturn prepared by tho .Jlinistry. of, Finance statu that the taxi*

tion per head in' Germany (including local and State taxes) is £2 '88., as against £4 15s. in Britain. The British figures aro over-stated, but it is quite certain that the 'Gorman taxpayer gets off lightly. Tho German national debt is also a little less than Britain's, in proportion to population, amounting to £12 7s. per head. In-New Zealand, it may be noted in passing, the national debt amounts to nearly £70 per head! The figures which we havo quoted make it quite clear that tho embarrassments' of the Imperial Treasury do not. reflect a weakness in the resources of tho/German nation. In. thirty-eight • years Germany has grown from a trivial European State to one of tho gi'eatest and most vigorous Powers in the world. But even thirtyeight years is not a long enough period, to justify confident predictions as to Germany's future. Bapid growth is notnecessarily stable growth; indeed, it may result in the body becoming morbid and febrile. Yet, for years to comc, tW.Govt ornment will have no difficulty in'finding the money for'any monstrosity at all" in the way of naval programmes, if. the people will submit to the pressure of higher taxation. There are, signs, however, that the German peoplo arc'not ardently in love with the - modern Imperial programme.' .' ~